Why You’re Not Rich Yet (Or may never be)

The definition is different for everyone, but the theme is common in most people I interact with. They WANT to be rich or at least have all the things they associate with wealth. To be fair, I want some of those fancy ass things too, a boat and a cabin on a lake sound about right (in time, Mr. AE, in time). If you’re curious why you’re not rich yet, maybe one of these reasons apply to you.

As someone who pays close attention to all things money, I consistently see and hear people devaluing hard work and focus. Instead of actually giving props when they are due, theyattribute success to luck instead of what it actually took.

An example: Paying off student loans

I have brought up the fact that we paid off my student loans when the topic arises (as it does frequently with Millennials) and you know what the usual response is?

“Did your parents pay for most of your tuition?”

“You’re so Lucky”

Or my favorite Minnesotan comment:

“Oh – That must be nice”

(said with a heavy dose of passive aggression that implies you had help)

Why You’re Not Rich Yet

It’s not because you haven’t won the lottery, caught your “Big Break” or found a sugar daddy/momma to boost you into wealth. Those are the stories you see in the news, but they are not how the vast majority of people get rich.

Side note: You could be doing everything right and still not be there. We aren’t rich yet either as one of the below reasons applies to us 🙂

Why You’re Not Rich Yet…Your Definition of Rich is Wrong

I remember when I was pretty young (12 or 13) telling one of my relatives that my friend’s parents were “loaded” and they responded with:

“They aren’t loaded, they just are able to afford more debt”

I wish I would have done some due diligence on that statement in my younger years before taking on a massive pile of student loans because, more often than not, they were right.

Cars, Boats, Toys, Houses, Jewelry, Electronics, all the way down to the fancy dinner and drinks do not make you rich. Especially if those indulgences are backed by the bank via debt, then they are making you less rich.

Its called Lifestyle Inflation, earning more matched by spending more is a wealth-destroying cycle that entraps many. Instead of stuff, view being rich as having options. The option to use your FU Fund to buy time or a better work-life balance. The option to spend more time with your family or travel the world if you so desire.

I have zero, ZERO! issues with spending on stuff that makes you happy. That is why you earn it in the first place, but if you are spending just to appear like someone who has their act together – What’s the famous saying?

“A Fool and their money are soon parted”

Why You’re Not Rich Yet…Lack of Patience

In the age of “Get Rich Quick” no one wants to stick it out for the 10-20 years that it actually takes for wealth to build. The progress “appears” to be too slow for most of the crowd (if this sounds like you I suggest checking out the growth curve below).

Growth starts to get reaaaally interesting after the first 15-20 years. Some numbers to give the above graph context (Assuming 8% growth, investing $400/month):

20 years in – you have invested $96,000 and earned $133,063

40 years in – you have invested $192,000 and earned $1,104,721

Be patient!!!! Every time you try a new “get rich quick plan” then quit and start over a few months later you are delaying that steep incline at the end where the compounding gets super sexy.

I’m not telling you to do something you hate, I’m telling you to ditch the get rich quick (*Cough*….MLM….*Cough*) strategies that don’t work for 99.9% of the people that join them. Beware of the pyramid scheme. There are far better ways.

Why You’re Not Rich Yet…Not Investing Enough

Breaking this down into two distinct (equally important) buckets

Not investing enough in yourself

The successful people I know (both in the side hustle and/or professional world) are not shy about investing in themselves via time or money. They take on optional Classes. Certifications. Speaking Arrangements. Challenging Projects. or anything else they can use to their advantage in the future.

They push their comfort zone – consistently.

They are also constantly learning, whether it be something that directly applies to their job/side hustle or for pleasure (which also makes them a well-rounded person).

Skills get you paid, which helps a lot with the next point:

Why you’re not rich yet……Not Investing Enough Money

This could be an income problem, a spending problem, a fear of investing problem or some combination of all 3. Outside of finding ways to increase your income, investing early and often is my number one secret to success.

“Enough” depends on your goals, but the average American is saving far too little today to even have a comfortable average retirement. If you want an above average bank account, you need to save and invest an above average amount.

Don’t seek perfection, start now and tweak the investments as you learn what investing is all about.

If you want to see the power of investing over time check out the next section

Why You’re Not Rich Yet…Time

I said one of these categories applies to us – and here it is.

Time, or specifically Time In the Market is critical for us to hit our long-term milestones. It is hard as hell to become rich without giving your money enough time to double, multiple times.

We got a fairly young start at ~27 and my only regret is not figuring this out sooner

If you want to get rich “quick” your options are limited:

Own your own (successful) business

Make a huge salary and live off less than 20% of it

Inherit it

Be an incredibly successful stock picker (good luck)

The lottery (puke)

All of these options are incredibly risky, difficult, stupid or a combo of all three. The easiest way to wealth is to invest early and often, don’t touch it and let it do its thing (remember the chart from above).

Time in the market can only be made up by investing MORE (usually a lot more) money later.

Breaking down some numbers*:

If you invested $400 per month starting at 20 = $1,934,675

$400 per month if you started investing at 30 = $862,541

$400 per month if you started investing at 40 = $365,936

And finally, $400 per month if you started investing at 50 = $135,911

If you waited until you were 30 (instead of 20) to start investing you would have to invest over $900 per month to amass $1,934,675 at 65. That is over double what the 20-year-old needs to save. Every year you tack on without saving requires a significantly higher savings target to match your younger self.

*Assumes 8% annual return, retiring and investing until age 65. Keep in mind that inflation would eat a huge chunk of that total as well ($1,934,675 in today’s dollars is $534,461 at a 2.9% annual inflation rate)

It all comes down to Action (with a side of patience)

In order for time to be on your side, you need to Take Action today. Learn new skills, make more money, understand that being rich isn’t an overnight endeavor and most importantly Invest.

I think ESIMoney said it best If You Want What I Have You Have to Do What I’ve Done and he has done what most people don’t. Put in the time and work. If you don’t want to do that, maybe this whole being rich thing isn’t in the cards for ya, there is always the 1 in 1,000,000,000 shot of hitting the powerball.

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Reader Interactions

Comments

Action + Time is the recipe, no doubt! I’ve been gently telling my 18 y.o this – he’s in the perfect position to get a great start. If he starts saving right now, it wouldn’t take much each paycheck to make a huge difference for him later in life. Fingers crossed he listens to his mother. 😉

I like the response about how the people who look “loaded” have more access to debt than others. Totally true, especially in this interest rate environment. We are guilty of this ourselves with our home purchase.

Time, work, AND a whole lotta luck thrown in as well 😉 $400 a month to savings at twenty years old, or even twenty-two, would have been impossible for me. But absolutely I agree with the point to start early and often, whatever that number may be.

What a great post. I have to admit I have zero patience! I’ve been on my “get Rich or die tryin” path for about a year now. Still wake up broke ha!
It does get discouraging to see those sexy stories of people making it big in less than a year, but gotta remember to keep faith!

Hindsight is a great thing… unfortunately it feels they majority of us has to go through the usual journey of:
1. Being told that “it is important to save money, and you need to start early”
2. Saving something (say, around 100 per month, which is quite a lot when you’re starting)
3. Realising after a year you’ve only saved 1,002 (the 2 being the interest earned)
4. Giving up thinking “what’s the point? Another year of renounces to get to 2,000!? Let me spend the 1,002 on ”
5. Realising after a few years that actually it would be good to have some savings, and that you’ve lost time by not saving until now
6. Starting saving with this new mindset and a longer term view (an increase in earnings in the meantime helps, eg. promotions, new jobs etc)
…and 7. Starting telling other people “it is important to save money, and you need to start early”

This definitely was my journey! 🙂 and of a good 80% of all people I know. And that’s fine – sometimes you need to experience things first hand to learn your lessons. The only thing that makes a difference is how quickly you reach step #6…

This is a wise article. The only fact that if you start investing early, you will save a lot when you retire can save a lot of lives. I think no matter how small, all of us need to save at least 5% of our income. Having the knowledge, it’s also a good practice to invest that money in the stock market.
Best,

Wow. This was an excellent post. Very eye opening. I really like this. You said all the things I think or say to people in this post. And I agree, that all things that are good and important come with time.

I stumbled upon your article and relate in more ways than expected. Also, I think you’re from MN, so straight up street cred. from a fellow minnesotan. 🙂 We’re on the “pay off student loans” path, and it’s taken a few side-hustles and a new job to see progress.

I am soundly into the category of “I wish I figured this out sooner.” I started saving significantly in my late 20s. Fortunately for me, I saved fast and hard, and am making up those lost gains. I got smart a few years before this current bull run, and have been a good place to take advantage of it. Hopefully, it pays off well.

The difficulty of the modern world, now 42 I feel old enough to say such things, is that we can get things so easily so fast. I recall saving up G I Joe points from the various GIJoe toys I received to then send away for a reward toy. It took 6-8 weeks to get the reward toy after saving up for a few years of toy points. Mail order in the 80s was always 6-8 weeks. A few years back, that Lorde song Royals came out, and it really makes my point for me in this case; besides being a song I enjoy listening to.

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